Zee Telefilms' acquisition of a controlling stake in Dubai-based Taj Television-owned Ten Sports will consolidate the former's position in the sports arena. Zee's purchase was based on the enterprise value of $114 million for Taj Television. Since both entities have state-of-the-art production facilities, it is expected that one of the two will become a centralised production hub. This might open a new revenue stream for Zee as one of the two facilities can be rented out. Taj TV's average annual revenues for the next three financial years are expected to be in the region of $50 million. The deal will help Zee to achieve synergy in terms of transponders and satellite capacity. Apart from this Zee could also make substantial cost savings on their programming. While Ten Sports faces a stiff competition from ESPN Star Sports, it has a good library of all the top international sporting events, which include the US Open, WWE and the Hockey World cup. Additionally, Ten Sports also has rights for cricket properties like Pakistan Cricket Board, Sri Lanka Cricket Board and West Indies Cricket Board. This would translate into around 150 days cricket for Zee, spread over 2-2.5 years. It is believed that apart from BCCI neutral venue rights that Zee Sports has, the company becomes one of the formidable players having scores of international cricketing events lined up.
Simultaneously, this would also give it access to a larger number of audiences speaking different languages and increase subscription numbers. The acquisition will provide the company immense muscle to extract larger share of spend from the advertisers.
While Ten Sports' shift from One Alliance bouquet might not be effected immediately, it might share its content with Zee. With as many as 12 shows of the company figuring in the top 50, Zee's viewership is on an upswing and is translating into increasing advertising revenues. The company's September quarter results show that its revenues are growing at 38 per cent y-o-y to Rs 460 crore though the company suffered Rs 83 crore loss on account of new businesses particularly Zee Sports. The company is also trying to concentrate on its DTH foray. It however remains to be seen if the company will subsidise set-top boxes to net a larger number of subscribers at reasonable cost. In this segment it faces severe competition from Tata Sky.